1、CH11)Financial markets and institutions A)involve the movement of huge flows of money.B)affect the profits of businesses.C)affect the types of goods and services produced in an economy.D)do each of the above.E)do only(a)and(b)of the above.24)Compared to fifty years ago,A)small savers have more optio
2、ns for what they can do with their savings.B)small savers have fewer options for what they can do with their savings.C)small savers are likely to put their savings in a savings account at a commercial bank.D)small savers are likely to put their savings in a savings account at a savings and loan.26)M
3、arkets in which funds are transferred from those who have excess funds available to those who have a shortage of available funds are called A)commodity markets.B)fund-available markets.C)derivative exchange markets.D)financial markets.27)The bond markets are important because A)they are easily the m
4、ost widely followed financial markets in the United States.B)they are the markets where foreign exchange rates are determined.C)they are the markets where interest rates are determined.D)of each of the above.E)of only(a)and(b)of the above.29)The stock market is important because A)it is where intere
5、st rates are determined.B)it is the most widely followed financial market in the United States.C)it is where foreign exchange rates are determined.D)all of the above.31)Budgets deficits can be a concern because they might A)ultimately lead to higher inflation.B)lead to a higher rate of money growth.
6、C)lead to higher interest rates.D)cause all of the above to occur.33)The price of one countrys currency in terms of anothers is called A)the exchange rate.B)the interest rate.C)the Dow Jones industrial average.D)none of the above.34)Everything else constant,a stronger dollar will mean that A)vacatio
7、ning in England becomes more expensive.B)vacationing in England becomes less expensive.C)French cheese becomes more expensive.D)Japanese cars become more expensive.45)Banks,savings and loan associations,mutual savings banks,and credit unions A)link those who want to save with these who want to inves
8、t.B)play an important role in determining the quantity of money in the economy.C)have been adept at innovating in response to changes in the regulatory environment.D)all of the above.E)only(a)and(c)of the above.51)Compared to interest rates on long-term U.S.government bonds,interest rates on _ fluct
9、uate more and are lower on average.A)medium-quality corporate bonds B)low-quality corporate bonds C)high-quality corporate bonds D)three-month Treasury bills E)none of the above 62)A rising stock market index due to higher share prices A)increases peoples wealth and as a result may increase their wi
10、llingness to spend.B)increases the amount of funds that business firms can raise by selling newly-issued stock.C)decreases the amount of funds that business firms can raise by selling newly-issued stock.D)both(a)and(b)of the above.75)From 1980 to early 1985 the dollar _ in value,thereby,benefiting A
11、merican _.A)appreciated;consumers B)appreciated,businesses C)depreciated;consumers D)depreciated,businesses CH210)Which of the following can be described as involving direct finance?A)A corporation issues new shares of stock.B)A corporation buys commercial paper issued by another corporation.C)A pen
12、sion fund manager buys commercial paper from the issuing corporation.D)All of the above.E)Both(b)and(c)of the above.24)Which of the following are long-term financial instruments?A)A negotiable certificate of deposit B)A bankers acceptance C)A U.S.Treasury bond D)A U.S.Treasury bill 28)Which of the f
13、ollowing are intermediate-term financial instruments?A)A bankers acceptance B)A share of Walt Disney Corporation stock C)A Treasury note with a maturity of four years D)Each of the above 37)Which of the following instruments is not traded in a money market?A)Bankers acceptances B)U.S.Treasury Bills
14、C)Eurodollars D)Commercial paper E)Residential mortgages 39)Which of the following instruments are traded in a money market?Bank commercial loans B)Bankers acceptances C)State and local government bonds D)Residential mortgages.65)Federal funds are A)funds raised by the federal government in the bond
15、 market.B)loans made by the Federal Reserve System to banks.C)loans made by banks to the Federal Reserve System.D)loans made by banks to each other.E)none of the above.77)Which of the following statements about financial markets and securities are true?A)A bond is a debt security that promises to ma
16、ke payments for a specified period of time.B)The maturity of a debt instrument is the time(term)to that instruments expiration date.C)A debt instrument is short term if its maturity is less than one year.D)All of the above are true.82)An important financial institution that assists in the initial sa
17、le of securities in the primary market is the investment bank.B)commercial bank.C)stock exchange.D)brokerage house.89)U.S.Treasury bills are issued in A)three-,six-,nine-,and twelve-month maturities.B)three-,nine-,and twelve-month maturities.C)three-,six-,and twelve-month maturities.D)three-,and six
18、-month maturities.92)U.S.Treasury bills A)are the safest of all money market instruments.B)sell at a discount because they have no interest payments.C)are the most liquid of the money market securities.D)are all of the above.E)are only(b)and(c)of the above.95)In the United States loans from _ are fa
19、r _ important for corporate finance than are securities markets.government agencies;more B)government agencies;lessC)financial intermediaries;more D)financial intermediaries;less 97)The countries that have made the least use of securities markets are Germany and Japan;in these two countries finance
20、from financial intermediaries has been almost _ times greater than that from securities markets.A)three B)four C)five D)ten 99)Studies of the major developed countries show that when businesses go looking for funds to finance their activities they usually obtain these funds from government agencies.
21、B)equities markets.C)financial intermediaries.D)bond markets.101)American businesses get their external funds primarily from bank loans.B)bonds and commercial paper issues.C)stock issues.D)other loans.110)In financial markets,lenders typically have inferior information about potential returns and ri
22、sks associated with any investment project.This difference in information is called A)comparative informational disadvantage.B)asymmetric information.C)variant information.D)caveat venditor.11)Which of the following can be described as involving indirect finance?A)You make a loan to your neighbor.B)
23、A corporation buys a share of common stock issued by another corporation.C)You buy a U.S.Treasury bill from the U.S.Treasury.D)You make a deposit at a bank.20)Which of the following can be described as involving indirect finance?A)You make a loan to your neighbor.B)You buy a U.S.Treasury bill from t
24、he bank.C)You buy a U.S.Treasury bill from the U.S.Treasury.D)A corporation buys commercial paper issued by another corporation.43)Financial intermediaries A)exist because there are substantial information and transactions costs in the economy.B)improve the lot of the small saver.C)are involved in t
25、he process of indirect finance.D)do each of the above.E)do only(a)and(b)of the above.44)Which of the following financial intermediaries is not a depository institution?A)A savings and loan association B)A commercial bank C)A credit union D)A finance company E)None of the above 45)Which of the follow
26、ing is a contractual savings institution?A life insurance company A credit union C)A savings and loan association D)A mutual fund 46)Which of the following are not contractual savings institutions?A)Life insurance companies B)Credit unions C)Pension funds D)State and local government retirement fund
27、s 52)Which of the following are depository institutions?A)Mutual savings banks B)Credit unions C)Mutual funds D)All of the above E)Only(a)and(b)of the above 55)Which of the following are investment intermediaries?A)Finance companies B)Mutual funds C)Pension funds D)All of the above.E)Only(a)and(b)of
28、 the above 56)The primary assets of a pension fund are money market instruments.corporate bonds and stock.C)consumer and business loans.D)mortgages.57)The primary assets of a savings and loan association are A)money market instruments.B)corporate bonds and stock.C)consumer and business loans.D)mortg
29、ages.58)The primary assets of credit unions are A)municipal bonds.B)business loans.C)consumer loans.D)mortgages.59)The primary assets of a finance company are municipal bonds.B)corporate stocks and bonds.C)consumer and business loans.D)mortgages.60)The primary assets of commercial banks include A)mo
30、rtgages.B)consumer and business loans.C)U.S.government securities.D)all of the above.E)Only(a)and(b)of the above 62)The primary liabilities of fire and casualty insurance companies include commercial paper,stocks,and bonds.B)premiums from policies.C)savings deposits.D)all of the above.63)The primary
31、 liabilities of a commercial bank are bonds.B)mortgages.C)deposits.D)commercial paper.64)A situation in which a party issuing a debt instrument is unable to make its interest payments is called a A)failure.B)insolvency.C)devaluation.D)default.29)A borrower who takes out a loan usually has better inf
32、ormation about the potential returns and risk of the investment projects he plans to undertake than does the lender.This inequality of information is called moral hazard.B)asymmetric information.C)noncollateralized risk.D)adverse selection.33)Adverse selection is a problem associated with equity and
33、 debt contracts arising from A)the lenders relative lack of information about the borrowers potential returns and risks of his investment activities.B)the lenders inability to legally require sufficient collateral to cover a 100%loss if the borrower defaults.C)the borrowers lack of incentive to seek
34、 a loan for highly risky investments.D)none of the above.36)Because of the adverse selection problem,A)lenders may choose to lend only to those who do not need the money.B)lenders typically require collateral before making a loan.C)lenders may refuse loans to individuals with low net worth.D)all of
35、the above.37)Because of the moral hazard problem,A)lenders may demand positions on the board of directors of the firms that they provide with financing.B)lenders will choose to write complicated contracts,prohibiting the borrowers from using the loan proceeds for unauthorized purposes.C)lenders will
36、 more readily lend to borrowers with high net worth.D)all of the above.91)Moral hazard in equity contracts is known as the _ problem because the manager of the firm may shirk his responsibility to maximize profits for the shareholders.adverse selection B)free-rider C)principal-agent D)debt deflation
37、 94)Which of the following is not one of the eight basic puzzles about financial structure?A)Stocks are the most important source of finance for American businesses.B)Issuing marketable securities is not the primary way businesses finance their operations.C)Indirect finance,which involves the activi
38、ties of financial intermediaries,is many times more important than direct finance,in which businesses raise funds directly from lenders in financial markets.D)Banks are the most important source of external funds to finance businesses.100)Which of the following are true statements concerning financi
39、al structure in the United States?A)Issuing marketable securities is not the primary way businesses finance their operations.B)Bonds are a far more important source of finance than are stocks in the United States.C)Together,bonds and stocks supply less than one-third of the external funds that corpo
40、rations use to finance their activities.D)All of the above are true statements.109)Because information is scarce,A)helps explain why debt contracts are used so much more frequently to raise capital than are equity contracts.B)monitoring managers gives rise to costly state verification.C)government r
41、egulations,such as standard accounting principles,can help reduce moral hazard.D)all of the above are true.E)only(a)and(b)of the above are true.CH32)The difference between money and income is that A)money is a flow and income is a stock.B)money is a stock and income is a flow.C)there is no differenc
42、e-money and income are both stocks.D)there is no difference-money and income are both flows.3)Currency includes A)paper money and coins.B)paper money,coins,and checks.C)paper money and checks.D)paper money,coins,checks,and savings deposits.4)The conversion of a barter economy to one that uses money
43、increases efficiency by reducing A)the need to exchange goods.B)the need to specialize.C)the need to employ team production methods.D)transactions costs.12)Today,most money in the United States is in the form of A)currency.B)currency and coins.C)checkable deposits.D)savings bonds.13)When economists
44、say that money promotes efficiency,they mean that money A)reduces transactions costs.B)encourages specialization and the division of labor.C)is inexpensive to produce.D)does both(a)and(b)of the above.15)Some of the forms money has taken throughout history include A)tobacco.B)cigarettes.C)stone wheel
45、s.D)all of the above.20)If the price level doubles,the value of money A)doubles.B)more than doubles,due to scale economies.C)rises but does not double,due to diminishing returns.D)falls by 50 percent.21)During hyperinflations,A)the value of money rises rapidly.B)money no longer functions as a good s
46、tore of value and people may resort to barter transactions on a much larger scale.C)middle-class savers benefit as prices rise.D)all of the above occur.30)Although it can have a number of characteristics and serves more than one role,money must A)be backed in gold.B)have a nonmonetary value.C)be gen
47、erally acceptable.D)be inexpensive to produce.33)The narrowest measure of money that the Fed reports is A)M0.B)M1.C)M2.D)M3.34)Which of the following is not included in the measure of M1?A)NOW accounts B)demand deposits C)currency D)repurchase agreements 36)Which of the following is included in M2 b
48、ut not in M1?A)NOW accounts B)Demand deposits C)Currency D)Money market mutual fund shares(noninstitutional)E)gold coins issued by the U.S.Treasury 43)Money is A)anything that is generally accepted in payment for goods and services or in the repayment of debt.B)frequently-but incorrectly-used synony
49、mously with wealth.C)currency,demand deposits,and other items used to make purchases.D)all of the above.E)only(a)and(c)of the above.49)For a commodity to function effectively as money it must be A)easily standardized,making it easy to ascertain its value.B)widely accepted.C)divisible into relatively
50、 small units.D)all of the above.E)only(a)and(b)of the above.59)Which of the following is not included in the M1 measure of money but is included in the M2 measure of money?A)savings deposits B)demand deposits C)travelers checks D)other checkable deposits 73)When prices in a particular country rise e
